Aussie supermarkets have a trust problem. Here’s how they can fix it
As December rolls on and our collective retail focus rises to scope out the year ahead, what’s clear is that 2024 will be a big year for retail customer technology.
Just five years ago, some of the biggest brands in the Australian retail landscape were effectively e-com deniers – or at least digital laggards. Lockdowns and the pandemic changed all of that, and today there’s hardly a CEO, board or management team that hasn’t taken the full dive into data and digital as their path to future success.
Today, the industry is buzzing with replatforming of websites, installation of customer data platforms and leveraging of customer experience data into multichannel behavioural insights. Plus, it seems everyone has an app.
And there’s more to come. At the big end of town, Woolies X, with its embedded Quantium research is driving the customer data revolution for team green, while Wesfarmers’ OneDigital promises to play catch up and unleash the power of Flybuys with a huge commitment in talent and marketing (what about that AFL Grand Final budget). Both programs put customer data firmly at the centre of the entire retail operation.
What should follow is a golden era of customer engagement. The promise, after all, has always been that connecting customer data points through sophisticated customer data platforms would help retailers get closer to truly understanding our customers’ wants, needs and behaviours. We should all be able to enhance our customer experience (CX) and better manage our customer relationships (CRM).
Because collecting all of this customer data is about getting closer to the customer, right?
Yet, signs are emerging that customers and retailers are not quite on the same page. Relationships rely on trust, and there are signs that trust is becoming an issue. In fact, as Roy Morgan’s recent study highlights, ‘distrust’ is on the rise among customers, even for some of our most ‘trusted’ retail brands.
The study flags that, despite the elevation of supermarket brands to become some of the most trusted entities in Australia, there is also a growth in distrust, and that’s a problem. As Roy Morgan CEO Michele Levine told the Australian Financial Review, “Distrust is not a lack of trust, it’s much more aggressively negative than a lack of trust.”
Trust is a big deal: more visceral than can be measured on a 5-point Net Promoter Score scale or tracked through transactional data points. The wake-up call is that, beyond our focus on data, we need to be properly in touch with the negative sentiment that can short-circuit the human connection between customers and brands – especially in retail.
This is about feelings, emotions and relationships. A reminder that there is a huge difference between user experience and human experience.
Qantas is the obvious and archetypal example of what happens when the pillars of trust are eroded from beneath customers’ relationship with a brand. Neglecting its human connections led to a tarnished social licence for Qantas – and that happened quickly.
Of course, our best and brightest retailers are smart enough to avoid going down the same path, aren’t they?
Shonky markets
Since the Roy Morgan study was released, Coles and Woolworths – our most trusted retail brands – shared the ignominy of winning a Choice ‘Shonky’ award for 2023. Behind the nomination was the contention that the retail businesses have delivered massive profits while their brands claimed to be working for the customer to bring prices down.
Choice has a point. Food prices have played a big role in driving inflation and cost-of-living increases through 2023. But in more recent months, beef prices have been dropping at the farm gate by 60 per cent or more, while supermarket prices stayed high. The story took a while to gain traction, but now Choice has made it an issue.
It’s easy to write off the Shonkys as a media stunt, part of Choice’s own marketing effort. But the story touched a nerve, and there’s a warning in the history of the awards, given that one of last year’s winners was Qantas.
The Shonky shines a light on a gap in the relationship between brands and customers – even for the brands with the greatest access to data and the most impressive suites of digital tech.
This gap is emerging across the market in three key directions, forming a paradox for our biggest retailers and their big data plans as they move into 2024 and beyond:
- Tech Tetchiness: There is growing disquiet in the suburbs about the growth of self-check outs and the implications for human connections. It’s an easy pick-up point for tabloids and talkback and it’s running hot on social media. Data integrity is an obvious inclusion within this topic. The next battleground is retail media.
- Cost Clarity: In a cost-of-living crisis, there is scrutiny on prices and a high sensitivity around fairness. Again, social media drives this scrutiny. Where there was once an accepted wisdom that supermarkets were doing their best on price for their customers, today we see debates about whether anyone really can ‘feed a family for under 10 dollars’, or just get a fair go on price.
- Data-Dependent Deals: As the infusion of tech and data builds its value for retailers, customers increasingly find they can’t get the best deals without scanning the app or ‘activating’ an offer – and handing over their personal data. Will they do that for a brand they distrust?
The paradox for retailers is that amongst their customer data there is doubtless clear evidence that customers are positively engaged with each of these elements, and it’s quite likely that the majority of customers are. The risk lies in becoming lost in that data, in having eyes down looking at the transactional data points rather than having eyes up, engaged with the human behind the numbers.
Eyes on the prize
So who might the winners be if customer trust in big retail continues to waver? One trend worth watching is the growth in truly independent, truly local supermarkets. Operating without the backing – or the baggage – of an overarching chain or umbrella brand, these owner-operated shops are intimately entrenched in their local communities.
Goods Grocery is my local example, and it’s fantastic. Having taken over a tired and depressing independent chain store in the small village of Westona, Victoria, the team at Goods has set out to provide a genuine alternative for local shoppers.
The décor is designed to fit with the tone of the local architecture and to feel just a little bit boutique-y. The range, which is tailored to suit the requests of locals, features brands and ranges that are not part of the everyday FMCG production line. The layout is designed to feel open and welcoming, and the checkouts are geared towards human interactions, not faceless transactions.
Goods recently celebrated its first anniversary, complete with free samples from artisan suppliers, face painting, a jumping castle and a free gourmet BBQ. The locals turned out in force to what was a genuine, local celebration of community, and the team was there to join in the fun.
Goods, and the similarly unique local supermarkets that are cropping up in villages around the country, represent a counterpoint to the offer of big supermarket chains. Built upon skin-in-the-game community engagement, its success is dependent on the relationships it creates with the local people that choose to come together as its customers.
It’s old-fashioned customer service, with not a mention of CX or UX or even a request to sign up to the database. Human-to-human engagement, genuine and authentic, is the key to its success.
Of course, a concept like Goods is, by definition, limited in its scope. But in doing what it does so well, this concept reminds us of what retail is, at its core, all about.
For big retail businesses, the challenge is finding the balance. As retailers, we would do well to check in on the human experience of our customers, beyond what our dashboards of NPS and CX data are telling us. Are we doing enough to remember the people behind the data and really understand their issues? Are we really earning trust – and warding off distrust? Or just checking the scores on our data dashboards?
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